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Summary Over the last decades, Malaysia demonstrated significant economic performance as a result of its industrial development policies. In its transition toward a technology‐based industrialization during the 1990s, the Malaysian government has committed to develop a well functioning National Innovation Systems (NSI) to move its economy from labor‐intensive manufacturing to higher value‐added activities. This paper explains the significance of the Malaysian innovation system for its development and examines the process of economic development in manufacturing sectors as a result of assimilating, adapting, utilizing, and generating manufacturing technology. This study focuses on the competences to discover, assimilate, utilize, learn, and improve new industrial technology, which is a key determinant of the successful development of local manufacturing sectors.
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Asgari et al. (2007) studied this question.
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